![]() Increasing DPO may indicate that a firm is having difficulty paying its suppliers and may be cause for concern, especially if the cash isn't being put to good use. Looking at trends in the DPO over quarters and years can provide a better picture on the future of a company. Looking at the DPO at one point in time can only tell you so much about the firm's cash flow management. Short-term payment terms with discounts.Improper utilization of credit offered by suppliers.Not all is bad with a low days payable, it could also indicate that the company has struck favorable short-term payment terms with a supplier in exchange for attractive discounts that are in line with their business model. It could also indicate improper cash management by the firm as they are not taking advantage of the credit being offered. ![]()
0 Comments
Leave a Reply. |
Details
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |